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Hi Renoljo,
You say:-
"Given the current market value is 260p, I don’t consider this to be a good offer.".
In effect, I think you are saying that you think that the current market price is too high. In that case wouldn't it best to sell your shares PDQ, and certainly before they get to ex-dividend date next Thursday, when everything else being equal you could expect the market price to fall to about 240p (subtracting the ordinary dividend of 3.5p and the special dividend of 16.8p)?
The per-share values for the ordinary dividend and the special dividend were, if my memory is correct, announced with the results on 29 July. At close of play the day before, the share price was only about 230p. On the day the results were announced, the share price rose considerably, to about 248p (I'm just taking those figures from the chart available on this site). Since then, the market price has risen quite a lot more, to just over 260p. Presumably most of that rise has been because "the market" was pleased with NWG's future prospects (based on what was said in the results), rather than because of the mechanics of this special dividend combined with consolidation.
It's a bit of a difficult one to call. If I had sufficient NWG shares to have a tax liability caused by the large dividend, and the shares were not in an ISA (or other tax wrapper), I'd be quite tempted to sell for 260-plus early next week if I could. However, neither of those conditions apply for me.
It's also worth bearing in mind that the consolidation ratio was decided on when the market price was probably a lot lower than it is now.
All the best, whatever you decide.
Mike.
Fat cats bas....
So the special Div & consolidation is essentially a buyback. But rather than buying on the open market, it’s a compulsory buyback from all shareholders. As for value, my calc is this; NWG are buying 1/14 of my shares off me, or 7.14%. In exchange for that they are offering me 16.8p per share. Dividing 16.8p by 7.14% gives me a value of 235p. Given the current market value is 260p, I don’t consider this to be a good offer.
Agree100% shatter.
I too held AV when their consolidation occurred - NO GAIN FOR US SHAREHOLDERS.
I also held TSCO when they did similar, you guessed it - NO GAIN FOR US SHAREHOLDERS.
The only winners are the fat cat board of directors, vote it down but there's no chance of that, too many fat snouts in the trough.
Inflationbuster… yep, I am an Aviva holder and my average jumped massively after the share consolidation debacle. Although Aviva and Nwg differ in that Aviva did a capital return. This will also be on a much smaller scale, thankfully.
After the Aviva affair I was out of pocket by a small amount due to dealing costs. This is all smoke and mirrors and NWG is the only winner. You end up with the same value but less shares and a higher average. On the plus side this will all be forgotten if the share price keeps rising..
Thanks for the detailed response!
Mike S02
Thanks for the really useful post, good reading.
I have purchased more shares this week with a view to keeping my 'round number' of shares after the consolidation has happened. It will also give me a small increase on the dividend / special dividend payment.
30th August looks to be an interesting day, hoping the share price moves up nicely.
Hi MasterShake,
In terms of your Q's, I'd answer as follows:
1. To me, Yes it is, although NatWest are 'positioning' it as a means of maintaining the % split between us private share holders and the government share - to me, I'm not that bothered if the government share went up a little in order to give us a special divi with no conditions attached, but that's just me
2. No, not guaranteed, as one of the points NatWest points out with the consolidation, is that the share price will remain 'static' based on the price going into the consolidation, ie the price a week on Friday, 26th August, as the consolidation occurs before opening the stock market on Tuesday, 30th August and after the bank holiday - that said and taking my steer from previous posts on this forum, there does seem to be some pent up demand that when consoilidation happens, many appear to want to get back into the market early on to 'buy back' their lost shares, so you have to assume that the 30th will probably be a good day and possible the day after too - unless of course something 'macro' is happening in the market that day
3. Applies to the shares owned before consolidation
My last point is you can actually vote FOR the special divi and AGAINST the share consolidation, as I've done and I know some others on the forum have done too - that's simply about what's right for me - that said, you have to think that NatWest board sought lots of input from their main shareholders before going down this route, so whilst I and some others may be seeking a different route for the special divi, you have to think that the consolidation is a done deal
Really hope that this helps alongside the other posts
Broker informed my average share price of holding wall increase.
1. Special Divi is recommended, has to be agreed by shareholders at GM on 25th August.
2. One can't assume the share price will increase if consolidation is agreed, there will however be less shares in circulation with a higher value based at that particular moment.
3. Special Divi is based on shareholding prior to any consolidation.
I am still a bit confused regarding the upcoming special dividend.
Any help answering the following would be appreciated:
1) Is the special divi simply a forced stealth buy-back from NWG? --> Am I losing 1/14 of my total shares, but getting their value back in £?
2) Once the consolidation happens, is it reasonable to assume the share price will increase by 1/14 of it's value to account for the loss in number of shares? Or is that value loss accounted for by the special divi?
3) Does the special divi apply to the number of shares I own before or after the consolidation?
When it was first announced I was quite excited at getting such a large divi, but now it seems like a pretty mediocre deal.
Please correct me if I'm wrong. Thanks.